Friday, September 6, 2013

Greed and moral need to be balanced

华商与经济转型系列78：贪婪与道德须平衡

夏伟文 & 陈薛卉

Economic
plans and policies can be written in splendid wordings with great ambition to
be achieved. However, how many of them explicitly highlighted certain moral
standards and responsibilities needed to be achieved in their plan? At minimum
level, moral element is only embedded in corporate social responsibility (CSR)
and assumed to be taught in certain subjects in education. These are not
enough. Therefore, moral responsibility is an important missing piece in
economic planning which can enhance the economy as well as welfare of its
people.

Missing
moral element in economic plan may not affect contemporary growth but does negatively
impact on holistic and sustainable development. On one hand, economic plan that
too bias to capitalist may results in income inequality where capitalists may
immorally parasite on workers’ and society’s welfare for corporate or
shareholders’ profit. This creates a greedy economy. On the other hand,
socialist style policy that bias to worker group commonly causes inefficiency
where none has incentive or moral responsibility to work hard. This creates a
sluggish economy. The ideal should be a balance between reward for constructive
greed and restriction by moral responsibility.

What
will be the effect if we never explicitly set moral responsibility in economic planning?
Does our economic plans like Economic Transformation Plan (ETP) has moral responsibility
as target? How can moral element enhance ETP and our economy?

Greed is good?

“Greed, for lack of a better word,
is good. Greed is right. Greed works. Greed clarifies, cuts through, and
captures, the essence of the evolutionary spirit. Greed, in all of its forms;
greed for life, for money, for love, knowledge, has marked the upward surge of
mankind.” Those words are from a famous fictional character
named Gordon Gekko, the main character and antagonist of the 1987 film Wall
Street and then, the 2010 film Wall Street: Money Never Sleeps, both
directed by Oliver Stone.

Here,
the question will be is being greedy the right way towards healthy economy?
From the economics perspectives, at least one person claim “yes, greed is good”
– Adam Smith of the classic school. Through his theory of invisible hand,
market can achieve efficiency when consumers and producers try to be greedy by
maximizing their utility and profit respectively. Despite ‘promoting’ greed is
good, Adam Smith’s idea of free market is actually originated from his Theory of Moral Sentiments that uphold
moral value in society and economics. This actually supported our call for
“balance between reward for constructive greed and restriction by moral
responsibility”. Only matter is that it needs to be highlighted out rather than
assume moral responsibility will be automatic.

Without
determining certain moral responsibility, “efficiency” could be misinterpreted as
monetary efficiency in which maximize profit neither equal to maximize economic
sustainability nor collective welfare. This could be resulted in negative
externalities to the environment, exploitation of labor and social imbalance,
which threaten sustainability, social justice and welfare.

In
a simple micro perspective example, let take a look at our surrounding. You may
find public car park lots being occupied by car repair shops, eateries, illegal
DVD selling stalls, pubs/disco and variety types of shops. One car wash bay can
easily swallowed five to eight parking lots at no cost to them but to the
public welfare. Together with businesses like selling pirates DVD, book
photocopying, illegal betting, illegal car jokey, prostitution, drugs, money
laundering and others make up so called “underground economy”. This type of
economy does not pay taxes nor usually benefit the society. Due to constant
missing moral element in policy and economic plan as well as lack of
enforcement, underground economy is flourishing in Malaysia.

Education

In
macro perspective example, commercialization of education and healthcare under
two of its National Key Economic Areas (NKEAs) may result in greedy economy
rather than welfare economy if no moral restriction is being attached to its
Entry Point Projects (EPP).

Few
education NKEAs could be better by emphasizing moral element through CSR. ETP
wishes to transform education sector from small scale, highly regulated and
public funding to national or regional players, self-regulated and demand-side
funding. All these planned changes are dangerously directing education into a
highly commercialized “commodity industry”as termed by German philosopher Theodor
Adorno (originally in German language as “kulturindustrie”).
Thus, the government should force private education institutions (from
pre-school to university level) to provide free education to (for example) one needy
student out of 20 paid students.

Acknowledging
that child’s brain develops the most during the first five years of life, EPP 1
and EPP 2 have been planned to develop early child care and education. This is
good. Yet, this goodness should be able to benefit all Malaysian including the
poor family. Indeed, President Barack Obama has recently planned for a free
national pre-school in United States to ensure every American child has fair
access to education at every level.

Thus, highlighting or legally imposing the needs to do CSR (preferable
in free education) in ETP could have bigger positive impact to our social and sustainable
economic development than relies on voluntarily charity.

Healthcare

Developing
health care as industry is like kill two bird with one stone – enable healthy
and therefore, more productive Malaysians and as new powerful engine of
economic growth. Some of the EPP are focused on globalizing and exporting of
medical devices and pharmaceutical products. Examples are EPP 3, EPP 9, EPP 10
and EPP 11. Some aim to make Malaysia an international medical hub for in vitro
diagnosis (IVD) (EPP 7), medical tourism (EPP 4) and medical refurbishment (EPP
12).

All
those EPPs can upgrade the medical industry in Malaysia but will the fruits of
success also being enjoyed fairly by the poor? ETP wishes private sector to
play more active and bigger role in Malaysian economy. Hence, make them play
equally more active and bigger role in protecting society welfare, especially
improving the poor is important aspect in economic planning. Highlighting
private sector’s moral responsibility in ETP for healthcare could enhance the
economic plan itself.

It
would be nice if ETP has certain target for free medical for the needy. In
addition, instead of focusing on foreign workers, EPP 1 could be enhanced by
targeting certain level of insurance coverage for every Malaysian including
non-working persons like housewife. EPP
5 could be enhanced by giving tax relief incentive to private hospital to give
free diagnosis service. There are various private companies listed as EPP
champions for respective areas. It would be better if they are given targets to
give education scholarship for medical study for the qualified needy talents in
Malaysia as their moral responsibility.

Conclusion

Ronald
Reagan, former President of United States once said the ultimate aim of welfare
is to eliminate the need of its existence. However, this can only be achieved
with moral economy rather than greedy economy system. In developing countries
like Malaysia, moral responsibility needs to be administrated and then
gradually cultivated before assuming it to be an automatic process.